Long term investment in infrastructure needed to boost UK economy

ConstructionThe UK government should reverse the long term slump in infrastructure investment to boost the economy, according to a new report from the Centre for Economic and Business Research and the Civil Engineering Contractors Association. The report, Securing Our Economy: The Case For Infrastructure, calls for the government to address the decade long £13bn infrastructure construction shortfall and lays out a series of recommendations to reverse the situation. The report claims the UK endures a £78bn GDP ‘black hole’ each year due to the lack of investment and that by investing at the level of other developed economies, the economy could enjoy an additional £100 billion each year by 2026.

The report found that for every £1bn spent on infrastructure, GDP increases by £1.3bn. It also claims that for every 1,000 jobs created in the construction sector, wider levels of employment increase by 3,050. CECA wants the government to spend 1 percent of GDP on infrastructure over the next five years to make the UK come into line with levels of infrastructure investment in countries like Germany and Switzerland.

CECA’s complete list of recommendations is as follows:

  • Government to establish a formal threshold for new infrastructure investment, ensuring that it does not fall below 0.8 per cent of GDP, the level at which significant detrimental impacts are created for the wider economy.
  • UK government to target new infrastructure investment to be at or above 1 per cent of GDP over the coming five years, to stimulate growth and close the gap in the quality of UK infrastructure compared to international competitors.
  • UK government to create an independent body to analyse strategic challenges facing the UK, and to identify how infrastructure can play a part in resolving these concerns.
  • UK government to promote prudential borrowing for local authorities to address their highways maintenance backlog through a one-off national programme of intensive improvements to local roads, significantly reducing the long-term cost of maintaining the network.
  • UK government to commit to a clear, long-term energy policy that provides certainty about the types of investment that will be required to update the UK’s generation and transmission capacity, releasing significant private sector investment.
  • UK government to develop a preparation pool of infrastructure projects that can be rapidly delivered, following a model successfully implemented by the Scottish government.
  • UK government to expand the reduced ‘project rate’ of the Public Works Loan Board from one to three projects per Local Enterprise Partnerships in England, and implement by November 2013. Require authorities drawing on the rate to demonstrate substantial private sector co-investment in funded projects.
  • Industry to work with government in England, Scotland and Wales to identify and resolve non-financial barriers that are blocking construction of local infrastructure projects.
  • UK government to develop a new model for the ownership and management of the strategic roads network, focussing on providing long-term certainty over the investment required in the network to ensure that it is able to meet future demand in an affordable manner.
  • UK government to make an early commitment to commence work on Crossrail 2, addressing the long term transport capacity issues in London.